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Congressional Testimony
July 19, 2001, Thursday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 3099 words
COMMITTEE:
SENATE AGRICULTURE, NUTRITION AND FORESTRY
HEADLINE: 2002
FARM BILL
TESTIMONY-BY: MR. ERIC M. BOST, UNDERSECRETARY FOR
FOOD, NUTRITION, AND CONSUMER SERVICES
AFFILIATION:
U.S. DEPARTMENT OF AGRICULTURE
BODY: July 19, 2001
TESTIMONY OF
MR. ERIC M. BOST UNDERSECRETARY FOR FOOD,
NUTRITION, AND CONSUMER SERVICES U.S. DEPARTMENT OF AGRICULTURE
BEFORE
THE COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY U.S. SENATE
Mr.
Chairman and Senator Lugar, it is a pleasure to see both of you again. I
appreciate the opportunity to join you today to discuss the reauthorization of
the Food Stamp Program - to build on its history of success to meet the demands
of this new century.
Nearly four years ago, then-Governor George Bush
appointed me Commissioner of the Texas Department of Human Services, one of the
Nation's largest human services agencies. With an organization of more than
15,000 employees and an annual budget of $3.5 billion, I was responsible for
administering State and Federal programs that served more than 2 million needy,
aged, or disabled Texans each month. I took that position after more than twenty
years of experience in managing human services agencies across the country. When
President Bush and Secretary Veneman asked me to join the team at the Department
of Agriculture, I was extremely pleased to have the opportunity to put my
experience at the State and local levels to work in managing and improving the
Federal nutrition assistance programs. I particularly looked forward to
representing the Administration in the process of reauthorizing the Food Stamp
Program - the foundation of the Nation's nutrition safety net - as part of the
Farm Bill. I believe that my knowledge and experience prepare
me well for this challenge. I look forward to working with this Committee as we
develop a reauthorization approach that both preserves those aspects of the
program that have served this country so well over the past decades, and makes
the changes needed for the program to function even more effectively and
efficiently into the future.
I would like to begin today with a brief
review of the Food Stamp Program's current status, and then describe some of the
changes in the program's performance and operational context that resulted from
welfare reform, before outlining my thoughts about aspects of the program that
could be improved during reauthorization.
A History of Success
In my view, the Food Stamp Program stands as a testament to our
country's compassion. For over 30 years, it has served as the first line of the
nation's defense against hunger, a powerful tool to improve nutrition among
low-income people. Any discussion of food stamp reauthorization must start with
recognition of the strong evidence that the Food Stamp Program works to reduce
hunger and improve nutrition in America.
It touches the lives of
millions of people who need a helping hand to put food on the table. Unlike most
other assistance programs, the Food Stamp Program is available to nearly anyone
with little income and few resources, serving low-income families and
individuals wherever they live with food-based benefits that increase a
household's food expenditures, and its access to nutritious food.
Because food stamps are not targeted or restricted by age, disability
status, or family structure, recipients are a diverse group, representing a
broad cross-section of the nation's poor.
In 2000, over half of all food
stamp recipients (54 percent) were children, 10 percent were elderly, and
another 10 percent were disabled. Many recipients worked, and the majority of
food stamp households were not on Temporary Assistance for Needy Families
(TANF). However, most food stamp households had little income and few resources
available to them. Only 11 percent were above the poverty line, while 33 percent
had incomes at or below half the poverty line. About two-thirds of all
households had no countable assets. The program is clearly successful at
targeting benefits to the neediest Americans.
The Program responds to
economic changes, expanding to meet increased need when the economy is in
recession and contracting when the economy is growing, making sure that food
gets to people who need it. Because benefits automatically flow into
communities, States, or regions of the country that face rising unemployment or
poverty, the program tends to soften some of the harsher effects of an economic
downturn.
However, over the last decade, food stamp participation rose
more sharply than expected during the relatively short and mild recession in the
early 1990s and then fell more sharply than expected after 1994 during the
sustained period of economic growth. In April 2001, the program served about 17
million people, down from 28 million at its peak in March 1994. In recent
months, the participation decline has slowed, and may have ended; over half of
all States are now serving more people than they did a year ago. It is important
to note that as participation has declined, program costs have also dropped
considerably; annual costs have declined by over $7 billion since fiscal year
1995.
The program delivers billions of dollars in benefits with a high
degree of integrity and accountability. The vast majority of program benefits go
only to households that need them. In 2000, about 6.5 percent of program
benefits were issued in excess of the correct amount; an additional 2.4 percent
should have been issued to recipients but were not. The combined overall payment
error rate of 8.9 percent represents the lowest rate of overall error in the
program's history. We are doing well, but further improvement can be made.
In 2000, 98 percent of households that received food stamps were
entitled to some benefit. Problems tend to occur far more frequently in cases
where an eligible household is provided with the wrong amount of benefits.
Difficulties in determining the correct level of benefits stem from a number of
factors: the intricacy of program rules designed to target benefits precisely,
the complex circumstances of working families, and the need to anticipate the
circumstances of program participants.
When errors resulting in
overpayments do occur, the Department works hard to recoup these funds from
those who receive them. In partnership with the States, there are a variety of
tools that support this effort, such as recoupment from active benefits,
voluntary repayments, referrals to collection agencies and offsets of State and
Federal payments. In fiscal year 2000, $223.8 million was collected through
these mechanisms. By far, the most successful tool is offset of Federal
payments, currently accomplished in partnership with the Department of Treasury
through the Treasury Offset Program. The Food and Nutrition Service has been a
leader among Federal agencies in this effort.
The period since the
program was last reauthorized has seen a revolution in the way that Food Stamp
benefits are delivered. In 1996, Congress set a deadline to have all food stamp
benefits delivered through Electronic Benefits Transfer, or EBT, by October 1,
2002. At that time, only about 15 percent of benefits were delivered
electronically. Today, 80 percent of all benefits are delivered through EBT.
Forty-three State agencies now operate EBT systems for the Food Stamp Program
and forty-one are statewide. The Department is aggressively working with staff
from the remaining State agencies to accomplish the goal of converting to
electronic delivery.
I am pleased to inform Congress that
interoperability-the ability to redeem EBT-based benefits across State lines-is
a reality today among all but a few States. The remaining few States are either
using smart card systems that are incompatible with on- line technology or are
working to overcome the technical and contractual issues that must be in place
before interoperability can occur. These issues are well understood by the
States and the EBT industry. The Department strongly supports the efforts
underway to address them.
One of the benefits of the move to electronic
benefit delivery is that it provides new tools in the fight against food stamp
trafficking; electronic transaction data are systematically analyzed and used to
identify violations, and we continue to refine our use of the data. While the
extent of trafficking food stamps for cash is estimated to be less than 4 cents
of every dollar issued, we must continue to be vigilant and to improve our
ability not just to redress trafficking and other kinds of fraud, but to ensure
that only eligible stores participate in the program.
USDA focuses
significant effort in this area. New stores are subject to an on-site visit to
assure that the store meets the eligibility criteria for authorization. Owners
and managers are provided orientation and training on the use of food stamp
benefits for eligible foods. And, stores are subject to periodic revisits to
assure that they continue to meet eligibility criteria. The Department measures
its success in this area by annually visiting a random sample of participating
stores and establishing a statistically-valid Store Eligibility and Accuracy
Rate (SEAR). The most recent SEAR results, for fiscal year 2000, show our
success: 98.5% of all participating stores were, in fact, eligible to
participate.
Ensuring effective stewardship of the taxpayer investment
in this program is one of the Department's most important responsibilities. I
look forward to working hard in the coming months to develop proactive
strategies to ensure that the Department prevents food stamp fraud and abuse
before it occurs. The Changing Environment Since Welfare Reform As I have
mentioned, much has changed since Congress last reauthorized the Food Stamp
Program. Increasing food security, ending hunger, and improving nutrition among
low-income families and individuals remain central to the program's mission. Yet
the challenges facing the program today - and the pace of change in the world in
which it operates - are substantial.
Welfare reform transformed social
policy for low-income families, replacing an entitlement to cash assistance with
a system that requires work in exchange for time-limited assistance. The 1996
welfare reform law (i.e. the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996) has been a great success in moving people from
dependency to self-sufficiency. Between January 1996 and June 2000, the welfare
caseload fell by over 50 percent - the largest welfare caseload decline in
history and the lowest percentage of the population on welfare since 1965. And
significant numbers of those have left welfare for work.
In important
ways, States have been the leaders of this revolutionary effort and are
responsible for its success. State governments made use of the flexibility
provided in the 1996 law to develop innovative efforts to restructure their
welfare programs to require work, time-limit assistance, improve child support
enforcement, or encourage parental responsibility.
The Food Stamp
Program has also contributed to the success of welfare reform by supporting the
transition from welfare to work.
The reasons are easy to understand-if
you are worried about your family's next meal, it is hard to focus on your
future. For many households, food stamps can mean the difference between living
in poverty and moving beyond it. And for many, it has. Welfare rolls, and the
proportion of food stamp households on welfare, have fallen sharply, while the
percentage of food stamp households with earnings has grown. Today, the Food
Stamp Program serves more families that work than families that receive welfare.
Now, more than ever, the Food Stamp Program plays a critical role in easing the
transition from welfare to work.
Food stamp participation has fallen
dramatically. As I mentioned earlier, the Food Stamp Program served around 17
million people as of April 2001, nearly 11 million fewer than at its peak in
March 1994. Part of the decline is explained by a strong economy, the success of
welfare reform in moving people into jobs, and restrictions on legal immigrants
and unemployed adults. But other factors may also be at work. The percentage of
people eligible for food stamps who actually participated fell 11 points between
1994 and 1998. In 1998, about 59 percent of those eligible for benefits received
them, roughly the same level seen in the late 1980's. Working poor families and
elderly people continue to participate at rates well below the national average.
Concerns have grown that the program's administrative burden and
complexity are hampering its performance in the post-welfare reform environment.
There is growing recognition that the complexity of program requirements - often
the result of desires to target benefits more precisely - may cause error and
deter participation among people eligible for benefits. For example, households
are required to provide detailed documentation of expenses for shelter,
dependent care, medical expenses, and child support. Similarly, the law requires
that most unemployed adults without children should only receive food stamps for
a limited time and most legal immigrants should not receive food stamps at all.
However meritorious the intent of this policy, provisions of this kind require
applicants to provide additional
information, introduce new rules for
caseworkers to follow, and
impose costly and potentially error-prone
tracking requirements
on State agencies.
These burdens are
particularly significant for the working families that comprise an increasing
portion of the Food Stamp caseload. Caseworkers are often expected to anticipate
changes in their income and expenses - a difficult and error-prone task,
especially for working poor households whose incomes fluctuate - and households
are expected to report changes in their circumstances to ensure that each
month's benefit reflects their current need. Such burdensome requirements may
discourage working families from participating in the program. They also make
the job of State agencies, that must serve these working families effectively
while delivering benefits accurately, significantly more difficult.
Finally, there is growing awareness that we need to reform the quality
control system to ensure that it more effectively encourages payment accuracy
without discouraging States from achieving other important program objectives.
The existing quality control system provides timely and accurate data on State
performance in issuing the correct amount of benefits, as well as other valuable
program information. Establishing sanctions against any State with a higher than
average error rate is a source of serious and continuing friction with States.
Sanctioning approximately half of the States each year does not contribute
effectively to productive partnerships that can achieve the program's
objectives. In addition, there is growing concern that the system discourages
states from achieving other desired program outcomes; such as program access. My
view is that every person eligible to receive food stamps should have full and
easy access, while maintaining integrity in the program. We need to re-examine
how the Food Stamp Program recognizes and supports its multiple program goals.
Food Stamp Reauthorization: A Framework for the Future
The
Administration considers the Nation's nutrition assistance programs a critical
source of food for low-income adults and children. It strongly supports
reauthorization of the Food Stamp Program, as well as the other important
nutrition programs - The Emergency Food Assistance Program (TEFAP), the Food
Distribution Program on Indian Reservations (FDPIR), and the Commodity
Supplemental Food Program (CSFP) - that are important components of the
Farm Bill. You have asked me to focus today on the
Administration's proposal for reauthorization of the Food Stamp Program. As you
know, my tenure in this position has just begun, and we are just starting a
process to develop our reauthorization proposals. I am eager to work with
Congress as these proposals are developed to make program improvements that will
address the challenges, and the changing policy environment, that I have
described. Today, I would like to identify and describe some general areas of
interest that we expect to explore in developing the Administration's proposal:
- Supporting Work: Food stamps can serve as a critical support for the
transition to work and self-sufficiency. But working families often have
circumstances that make complying with the program's procedural requirements
more difficult. We need to explore changes to make the program work better for
working families, facilitating their access to the benefits they need while
minimizing burdens for State agencies.
- Simplifying Program Rules:
There is broad agreement that the program has grown too complicated. The
consequences of this complexity for State and local program operators and, more
importantly, for the low-income people the program serves, are serious. We must
find ways to reduce burdens on applicants and participants, and to reduce
administrative complexity for local administrators.
- Maintaining the
Nutrition Safety Net: The national eligibility and benefit rules of the Food
Stamp Program form a safety net across all States. As States continue to explore
innovative welfare policies, food stamps must be available to provide a steady
base that serves the basic nutrition needs of low-income households wherever
they live. We need to preserve the program's national structure. At the same
time, we should consider whether program changes, including increased
administrative flexibility, could help to ensure that all those at risk of
hunger have access to the benefits they need. We also need to improve the
program's effectiveness in promoting healthy diets for the people it serves.
- Improving Accountability: As you know, prudent stewardship of Federal
resources is a fundamental responsibility, and is critical to continued public
confidence in this important program. We need to remain vigilant in the fight
against error, fraud and abuse, and consider improvements that can help to
ensure that the taxpayer investment in the program is used as effectively as
possible.
The Food Stamp Program's mission - to end hunger and improve
nutrition - remains as vital today as at the program's beginnings. I am pleased
to join the discussion we begin today to preserve the elements of the program
that have contributed to its history of success, and to strengthen and improve
it to meet the challenges of a new century.
Mr. Chairman, that concludes
my remarks. I would be pleased to answer any questions.
LOAD-DATE: July 23, 2001